Cheaper Household Appliances, Simplified Return Filing: GST Council Brings Cheer to Middle Class, Bizmen
Interim finance minister Piyush Goyal said apart from revenue collection, the GST council would also focus on job creation and growth.
Finance minister Piyush Goyal is felicitated during the 28th meeting of the GST Council in New Delhi on Saturday. (PTI)
Addressing the media, interim finance minister Piyush Goyal said, "Every state wanted that the rates on these items be lowered so that the middle income households are benefitted... It has also been decided that the GST Council will rise above revenue consideration and focus more on job creation and economic growth."
The move is seen as part of an effort by the Narendra Modi government to counter resentment before the 2019 general elections over the way GST was hurriedly implemented last year, hitting public as well as businessmen.
The products exempted from GST include deities made of stone, marble or wood, ‘rakhis’ without precious stones and sal leaves.
In major relief to middle-class consumers, the council reduced the tax on lithium ion batteries, vacuum cleaners, food grinders, mixers, storage water heaters, hair dryers, paint, varnishes, water coolers, perfumes, toilet sprays and cosmetics to 18 per cent from the 28 per cent slab.
While the GST on footwear up to Rs 1,000 was reduced by 5 per cent, that on handbags, jewellery boxes, art ware of glass and ornamental framed mirrors was lowered to 12 per cent. Tax rate on ethanol has been slashed to 5 per cent from 18 per cent at present.
Announcing that the new tax rates would be applicable from July 27, Goyal said traders with turnover up to Rs 5 crore will deposit the tax monthly but file returns just once a quarter.
He added that reverse charge mechanism had been stalled till September 30, 2019. Reverse charge is a mechanism where the recipient of the goods and/or services is liable to pay GST instead of the supplier.
The minister said return forms would be simplified into formats. "It will be different for composite dealers and for B2B or B2C dealers. It will be simplified into two formats — Sugaam and Sahaj," he said.
The exemption limit for traders in Assam, Arunachal Pradesh, Himachal Pradesh, Himalaya and Sikkim has been increased from Rs 10 lakh to 20 lakh.
In good news for transporters, the minister said, "Soon, we will link RFID tags with Goods and Services Tax Network (GSTN) for transporters. This will reduce their harassment."
Also a chance will be given till August 31 for businesses to migrate to the GST regime and late fee would be waived off, Goyal said.
He said besides revenue collection, the GST council would focus on job creation and growth and added that the council had cleared 46 amendments which would be passed in Parliament.
In the services sector, the hotel industry too has been given major relief as GST on accommodation service will now be based on transaction value instead of declared value. GST at the rate of 28 per cent is levied if a hotel room rent exceeds Rs 7,500. Between Rs 2,500 to below Rs 7,500 GST is levied at 18 per cent and for that of Rs 1,000 and below Rs 2,500, it is 12 per cent. Also, the tax rate on supply of e-books has been cut to 5 per cent from 18 per cent.
#GSTCouncil in the 28th meeting has continued its endeavour to simplify processes, further rationalise tax rates, & enhance cooperative federalism. Today’s decisions of the Council will go a long way in pushing productivity upward.— Arun Jaitley (@arunjaitley) 21 July 2018
This is a major step towards rationalising the 28% tax slab which has been narrowed to only a few commodities in the past thirteen months.— Arun Jaitley (@arunjaitley) 21 July 2018
Though the rate reductions are estimated to cost the government exchequer nearly Rs 8,000-Rs 10,000 crore, the minister said, "100 items will be impacted by today's decision. Today's revenue forgone is good for our consumers and MSME participants."
Earlier, the council had revised tax rates on 29 items in January. The biggest rate rationalisation decision was taken by the council in November 2017 when over 200 items were brought in to lower tax brackets from 28 per cent, 18 per cent, and 12 per cent.
The next GST Council meeting will be held on August 4, which will discuss issues relating to the Micro, Small and Medium Enterprises (MSME) sector as well as ways to incentivise digital transaction via Rupay cards and BHIM app.
(With PTI inputs)
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